Fitch has cut Chicago’s credit rating two steps to the lowest investment grade. From the Tribune:
Chicago had its credit rating cut to the lowest investment grade by Fitch Ratings after the Illinois Supreme Court tossed out Mayor Rahm Emanuel’s plan for dealing with the mounting debt to its workers’ pension plans.
The two-step downgrade on Monday to BBB-, one rank above junk, affected $9.8 billion of general-obligation bonds and $486 million of debt backed by sales taxes. The company said the outlook is negative, indicating that the rating could be lowered further.
It can’t go much lower. The consequence of this downgrade is that the city is going to pay more to borrow going forward. Let’s see. Declining population, increasing costs, higher cost of borrowing, not much left in the way of strategies for cutting costs.
Chicago is paying the price for years, decades worth of bad decisions.